5 Ways to Tackle Inflation as a Nonprofit Leader

I was a senior fundraiser when the Great Recession hit in 2008. 

Now, I’m not one to hit the panic button easily. I’ve been in development most of my career; I’m used to navigating uncertainty and high stress. 

But this year’s rocky economic markers and increasing inflation–and paying upwards of $7 a gallon for gas in Chicago–is reminding me of the impact the 2008 recession had on nonprofits. And the reality is this: Nonprofits that were not prepared suffered during the last recession. 

During the 2008 recession, many major donors decreased their gifts. The total number of individual donors declined drastically. Even with all the best practices of stewardship, many of those donors never came back. 

The Charities Aid Foundation, which studies the impact inflation has on philanthropy, has found that inflation devalues what nonprofits can do with their income. During times of inflation, donations just don’t go as far. 

There’s also a psychological factor at play here, as donors feel the pressure on their personal wealth. Donors, especially those giving at lower levels, are more likely to decrease their gifts or stop giving altogether–just when these donations are most needed by the charities they love. 

Simultaneously, many nonprofits face increased demand, as the folks they serve face greater financial hardship. 

Unfortunately, many nonprofits still don’t have adequate (or any) cash reserves or a plan for maintaining financial stability during a recession. 

Am I saying you should panic? No–that’s not useful. 

But I do think you should prepare. Maybe you’re not feeling the impact of inflation yet. Maybe–hopefully–you won’t. But it’s always better to be prepared and have a strategy in place.   

5 Questions Every Nonprofit Should Ask During Tough Economic Times  

1. How has inflation impacted us so far–where are we YTD against what we budgeted? Where have we seen increases in costs? How are we going to manage these increases?
2. Has this time impacted our revenue? Are we seeing trends toward lower giving than we expected? Are the paid-programs we run on track to hit their goals?
3. How much cash reserve do we have right now, and is that amount enough to sustain us through a period of lower revenues?  If so, how long can they sustain us?
4. What can we do now to better care for and communicate with our organization’s top supporters?
5. How can our board and volunteers help increase our organizational and fundraising bandwidth? What gaps could be filled by volunteers or lay leaders in the interim to get us through hard times?